Select Committee on Science and Technology Minutes of Evidence


Examination of Witnesses (Questions 40-59)

BILL RAMMELL, MP AND SIR HOWARD NEWBY

2 NOVEMBER 2005

  Q40  Mr Newmark: Minister, in February of this year Sir Howard said that in some parts of the country good-quality degree schemes in science subjects were not very thick on the ground. Do you think this is a problem?

  Bill Rammell: Where that is the case, arguably it is. I think it comes back to the point that you need to be stimulating demand to ensure that institutions can respond to that demand. Overall there has been an increase of quality, but we need to keep monitoring that to ensure that it continues.

  Sir Howard Newby: Can I come in on this, because I still hold to that position, I have to say. It is for that reason that now we have the Secretary of State's response to our advice that we will want to work very speedily and very hard to see what can be done about that problem. I can say that we have been opening up discussions with the Open University to create a national grid of learning, which might provide the kind of high-quality teaching provision in all parts of the country, including those where students might like geographical access to courses that we are concerned about. We are looking to possibly pilot this in the field of chemistry and modern languages. We have not yet reached agreement with the Open University but we would like to see what could be done, and perhaps with the Open University in collaboration with other higher education institutions, providing a kind of ubiquitous access route for students, wherever they live, rather than relying on accidents of geography, which can be a bit of a problem at the moment.

  Q41  Mr Newmark: Studies such as the Dearing Report suggest and Lambert Review argue that regional links between universities and business strengthen the economy and that high-tech "clusters" benefit from a local supply of STEM graduates. Do you see these arguments as a convincing reason for maintaining a good regional spread of STEM provision or are current levels of social mobility sufficient to meet these demands?

  Bill Rammell: High-tech clusters are very significant in driving regional economic development within this country. There is very interesting work being done on the role of universities in leading the kind of city region phenomenon that we are talking about across government; and, clearly, to enable that to happen you do need a good supply of STEM graduates. The kind that Howard has been talking about with the Open University will help in that regard. I also think you can overstate the degree to which the graduates that you need will have to come from the locality. There still is significant mobility in terms of where a student comes from, where they study, and where they end up working in their first job. Frankly, that is a good thing; it enables people to do cross-fertilising and move across the country.

  Sir Howard Newby: I agree with the point you are making in your question; I simply extend it to a wider group of graduates than just STEM graduates. I think there are other clusters of disciplines which can have an equally important effect. We should take the impact of higher education on local and regional regeneration very seriously. There is some evidence to demonstrate that if you can attract graduates into an area, they tend to hang around and have the kind of stimulation effect that you describe.

  Bill Rammell: In terms of mobility, we can have a great debate about the new variable fee system and student financial support system; however, I think it is very clearly the case that the new system of student financial support is a better deal for students than the existing one and will enable the kind of mobility we are talking about to better take place.

  Q42  Chairman: I cannot really let you get away with that!

  Bill Rammell: I did not think you would.

  Q43  Chairman: Heavens above! You actually think that next year when you are charging students £9,000—and they are going to have very, very significant additional costs in terms of their accommodation with an estimate by Barclays Bank of £33,000-35,000 at the end of the three years—that that is not going to affect mobility? That is not credible.

  Bill Rammell: I was comparing the existing system to the new system, and I have said this publicly on a number of occasions. I think there were two principal things we got wrong with the introduction of tuition fees in 1998. One was asking the students to pay before they went to university, and secondly with the abolition of student grants. Both of those issues are being rectified. If we can get the facts across to young people, the fact that you will not start repaying a penny until you are in work and earning more than £15,000 a year, and then you will be paying as little as £5.19 a week—and, frankly, most graduates starting work on about £18,000 a year are probably spending more than that on CDs a week than they are on paying back some of the money. It becomes a much better deal, a much more manageable deal. Interestingly, there are all sorts of individual financial lenders, who have said an awful lot of things; and frankly a lot of them have got vested interests in saying those kinds of things. I was very struck by a statement that the Council of Mortgage Lenders made recently, saying that they will make their judgment about what money they lend to a student, not on the basis of their overall debt, but their weekly outgoings as a proportion of their income; and the outgoings under the new system are less than they are under the existing one. In that context, I think it will make mobility. I am sure you will not agree.

  Chairman: Now is not the place. I am sorry, Brooks, but I just had to put something on the record.

  Q44  Mr Newmark: Your point addressed the second part of my question. The only point on my first question is that, having spent six years in Cambridge, Massachusetts and seen the benefits of the link between business and students and building up the high-tech corridor along Route 28, it has tremendous benefits in attracting students to areas and seeing them benefit financially from their education.

  Sir Howard Newby: I agree with that, and that is why, as a funding council, we have become aware over the last year or more now that we need to do much more to stimulate and incentivise universities to take on a transfer activity, even more seriously than they do.

  Q45  Adam Afriyie: My first question is to Bill. Should the Government prop up ailing science departments of any description, and, if so, under what circumstances and in what way?

  Bill Rammell: It depends what you mean by "prop up". I am not saying that there should be a carte blanche or an open cheque to any institution that is failing to recruit sufficient numbers of students to say that the Government will step in and intervene in those circumstances. Frankly, if you gave that kind of open-ended blanket commitment I do not think you would be getting value for money. However, we are asking HEFCE to intervene early with vice chancellors to create this kind of regional swap-shop approach where they look at problems that might be experienced. Although I cannot give a cast-iron commitment on what financial support HEFCE would be able to deliver, if you look at the evidence that HEFCE gave to the Secretary of State there were a number of case studies of where HEFCE had intervened at an early stage and provided financial support to institutions. I think that is the appropriate kind of intervention.

  Q46  Adam Afriyie: Do you have a set policy on how and when you intervene? What would you consider to be an ailing science department?

  Bill Rammell: There are not hard and fast rules in these circumstances, because it is too complicated for that, but it will be triggered by an institution saying in confidence to HEFCE, "we have a particular problem and think we are running into difficulties". HEFCE will then sit down and analyse with that department and that university, and with surrounding partners, if that is possible, to see if there is a way of managing provision either so that it continues or it does it on a co-operative basis. For example, we might be looking at the Scottish experience, where because of the high level of costs involved in STEM subjects there is some collaboration across institutions.

  Q47  Adam Afriyie: Sir Howard, obviously you are there to implement these interventions. At one point you mentioned it was on a case-by-case basis, which is what the Minister has just said. But if you are also concerned about the autonomy of higher education institutions and science departments, how do you intervene and when do you intervene? Do you just sit back and wait for these departments to get in contact with you, as the Minister has just suggested, when they are in desperate need?

  Sir Howard Newby: We have a long history, as the Minister said, of making these interventions in a rather low-key way, because often that is what leads to effective and successful outcomes. We have also to remind the Committee that for many years we have supported what we have called minority subjects, where we accept that there is a need to sustain national capacity, even in the absence of sufficient students studying the subject and making it economically viable. We have not really got on to supply-side interventions in our conversation but we will continue to do that as well. We receive regular reports from universities in terms of their financial health and their strategic planning, which they have an obligation to send us in terms of their annual monitoring statements, which are statements about their various activities. It is through that and through our regional teams that we quite quickly, frankly, pick up early intelligence about where a particular department or a particular institution is becoming vulnerable. That is why we wanted to insert the word "vulnerability" into the notion of "important" subjects.

  Q48  Adam Afriyie: Can you give us an example of what factors you are looking at; and then say how you would go about intervening precisely?

  Sir Howard Newby: Vulnerability could come from trends in student demand for a particular department, which we would pick up in the normal way through the university's returns and would lead us through our normal round of discussions with the university to say, "We have noticed that you have a declining number in heraldic studies; are you concerned about the future of heraldic studies in your university?" That would normally lead to—

  Q49  Chairman: Or mediaeval studies!

  Sir Howard Newby: Indeed. That would led to some confidential discussions between the university and ourselves about how they can turn this around, and we would see what we could do to help. It could also come through a university department losing a significant number of staff simultaneously, which has left that department very vulnerable. At least one of the chemistry department closures in recent months, which achieved a lot of headlines, came about through that process. If it helps, since the whole issue came up we have kept our ear fairly closely to the ground with universities, and there are now one or two but no more instances which we are keeping a very close eye on, where we do not expect any imminent announcements. Now we have the Secretary of State's response, we might well want to follow up some discussions with those one or two institutions to discuss with them their future strategy for those particular departments that certainly look ostensibly from the outside rather vulnerable.

  Q50  Adam Afriyie: I am still not entirely clear about the dividing line between autonomy for a university and then your intervention on the other hand.

  Sir Howard Newby: The honest answer is that there is not a clear dividing line. I have said to this Committee before that whilst we must respect the autonomy and independence of our institutions, because that is what has made our education system such high quality by world standards, it is nevertheless the case—and vice chancellors understand this—that the individual interests of 130 independent HEIs in England do not necessarily add up to an overall national interest. They have always understood that, hence our intervention on what I called "special subjects" earlier. Even now we are intervening on the supply side in various niche areas of science with the research councils. We are putting in support for chemical engineering. We are putting in support to ensure that the statistics research is healthier. More proposals will be coming forward over the next year. It depends, first, on our having good intelligence, and secondly on having the trust of vice chancellors to have an open and frank dialogue with them at an early stage; and thirdly to intervene in ways which are effective but which nevertheless recognise and respect in the end the judgments of senior managements in our universities.

  Q51  Chairman: Do you involve the learned societies in that respect? I am finding difficulty in getting a handle on how you get this intelligence together. It seems to be a mystifying process. You sit in a darkened room, do you?

  Sir Howard Newby: That is why I used the word "intelligence", Chairman; it is not just looking at quantitative measures, but it is also holding conversations, as we do from time to time with all universities and HEIs, about their immediate and longer-term futures. It is a mixture of soft and hard information. We do involve the learned societies in that from time to time, although I have to be a little careful here: the learned societies do not always see eye to eye with the senior managements of universities in each and every case at least. We certainly take their views into account.

  Bill Rammell: It is also worth saying, Chairman, to take the implication of your question, that this is not a process that you necessarily broadcast from the rooftops because if you did, you would are you the real risk of self-fulfilling prophesy that lecturers, support staff and indeed students vote both with their feet and make a potentially vulnerable situation even worse.

  Q52  Chairman: I am finding it very difficult to get the connection between the economy and the demand that it is making and how you then interface with the universities in order to make sure that that demand is met, and that you maintain a level of provision that is appropriate. That is very difficult to understand.

  Sir Howard Newby: It is difficult, and we all share the difficulty. We do have to steer this line, which is not a clear line, between respecting autonomy of institutions on the one hand, and respecting that there is a national interest that needs to be secured in the end on the other. Frankly, I can only say that it is a judgment call, if I am perfectly honest with you. Whether and how we should intervene in particular circumstances in a particular university in a particular part of the country in a particular subject comes down to a judgment call by both myself and my colleagues at the Funding Council and the senior management and governing bodies of the universities.

  Chairman: We might return to that at some future date.

  Q53  Dr Iddon: Can I look at the question of international students and their role in British universities, Sir Howard. We are told that 15 universities rely on overseas students for more than 15% of their income. Do you think you ought to encourage not only those universities but also the others to top up their income from this Government and other sources by attracting more foreign students?

  Sir Howard Newby: I think the fact that so many foreign students come to this country, and have come in increasing numbers in recent years, is a real vote of confidence in the British higher education system, and in principle this is something that we should celebrate. It is one of the demonstrators of the fact that we do have such a high-quality vibrant, dynamic system that so many overseas students want to come here and share in it. Let me say that straight away. It has all sorts of other beneficial consequences, and I am not thinking of financial consequences when I say that; it is concerning tolerance, multi-culturalism and celebration of diversity. All of that is very welcome. Where we get nervous, as a funding council, is where some institutions might be becoming over-dependent on a volatile overseas student market. Some of those institutions that you are referring to in the quote I gave to the Education and Skills Select Committee are institutions that are extremely strong financially with very high academic reputations. In their cases, that figure does not worry me, but there are some institutions on that list that are much weaker financially and which would be very vulnerable to any sudden downturns in the overseas student market. We are keeping this situation very closely monitored in terms of the risks that an over-dependence on overseas students might present to some institutions. As I say, we judge that risk in relation to the overall financial and indeed academic strengths of the organisation. Overall, to have more overseas students in our universities is a good thing.

  Q54  Dr Iddon: Has your organisation or any other organisation done any research to determine the future of the foreign students that are educated here? Do the majority of them return to their home countries, or do a substantial number of them stay on to develop the British economy?

  Sir Howard Newby: There has been some work done on this on international mobility, not by us at the Funding Council but by academic researchers, which shows that whilst the majority do go back to their home countries, a significant minority stay in the UK and contribute very substantially over their lifetimes to the UK economy. Rather like we were saying earlier about internal mobility within the UK, with students going to university away from home, and as they graduate a significant number of them tending to stay around and stimulate the local economy as a result, this is also true on an international level.

  Q55  Dr Iddon: I have a worry about research and development exiting this country and going abroad. There are rumours circulating at the moment in industry that another pharmaceutical company might pull out of research and development, because as you know some have already gone. If we are educating foreign students to a very high level and they are returning to their own country and we are not attracting enough STEM students to study those important subjects in our own country, is this not encouraging foreign industry in particular that is already based in Britain just to transfer their operations to another country?

  Sir Howard Newby: That is indeed a real danger. Increasingly, globally-organised research-intensive multinational companies will continue to site their investments in research and development not only where the overall economic environment is one they can work in, but also where they can gain access to the best talent. We have to make sure that we have more than our fair share of the best talent here in this country.

  Bill Rammell: In response to Dr Iddon, I do think that it is two-way traffic. There are numbers of overseas students who come here who then work in British industry. Frankly, if you look at the longer-term trends, in order to maintain the level of highly-qualified people we need to sustain our economic viability, and we need those overseas students to come here. However, we need to get the STEM debate into context. It is only about 6% of overseas students that are actually studying STEM subjects. Sometimes, some of the discussions create the impression that it is substantively more than that. Returning to your original point about whether there is a vulnerability for those institutions that recruit a high number of overseas students, one word of caution that I would give is this. While I think it is a very positive thing that we are getting those numbers of overseas students, there is a danger of having all your eggs in one basket on a country-by-country basis. To take an example, China is very current as a topic, and there has been a 20% downturn this year in the number of Chinese students coming to this country. The major reason is that the Chinese Government has taken a strategic decision to grow more of its students at home. There is nothing whatsoever that we or any other country can do about that. If you are focusing exclusively almost on one country, you do run that kind of risk; so in terms of attracting overseas students it is far better to go for a broad mix.

  Q56  Adam Afriyie: Does the Government have a limit on the maximum number of overseas students studying here, both in terms of whether it is economically sensible, or to be dependent in that way, but secondly in terms of the crowding out of those science and technology places for British undergraduates?

  Bill Rammell: First, there is not a limit. Second—and this is a Daily Mail/Daily Express issue that is in danger of completing misrepresenting the situation—they do not crowd out British students. They actually add £5 billion a year to British universities. If you want to look at it in global terms, you could argue that they are subsidising British undergraduates with the very substantial fees they pay by coming to this country. I do think that it is in our education and cultural and business interests that we get those overseas students coming to this country.

  Q57  Adam Afriyie: But if the UK is not able to meet its own needs for home-grown scientists, as a Minister of Government, are you comfortable that we might need to rely on overseas scientists to provide our needs here?

  Bill Rammell: No, and that is why this Government is doing an immense amount to stimulate demand, particularly in STEM science subjects, from British students. Even if we succeeded to our ultimate expectation, if you look at the demographics and our economic need as a country, it is in our material interests that on top of that expanded number of British students you get some highly qualified overseas students who contribute to our economic viability.

  Q58  Adam Afriyie: Sir Howard, has there been an example so far where overseas demand for a STEM place in Britain has dropped off and has caused a problem in the finance of a university or a science department?

  Sir Howard Newby: Yes, there has been. Certainly at departmental level and also the university level, I can think of one or two universities' finances where there has been a sharp deterioration because of the drop in overseas student demand. That is what I was saying earlier; we monitor these risks very closely.

  Q59  Adam Afriyie: That is one of those vulnerability factors.

  Sir Howard Newby: It is indeed.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2005
Prepared 15 December 2005